Fixed Interest Rates Are Possible Contributor, Says AAMC

It's no secret that medical students pay a steep price for four years of education at a U.S. medical school. In fact, according to the Association of American Medical Colleges (AAMC), in 2011, 86 percent of medical school graduates owed a median amount of $162,000 in education debt, which breaks down to monthly payments of $1,500 to $2,100.

However, some people may be surprised to learn that education debt levels among U.S. medical school graduates held fairly steady between 2009 and 2011. Mean education debt amounts for those years were $156,500 in 2009, $157,900 in 2010 and $161,300 in 2011, according to a new analysis of trends in cost and debt at U.S. medical schools that was released by the AAMC in July. Those amounts represent a 1.2 percent, a 1.0 percent and a 2.1 percent increase, respectively, compared with the previous year.

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Research from the Association of American Medical Colleges (AAMC) shows that in 2011, 86 percent of medical school graduates owed a median amount of $162,000 in education debt.

The AAMC says the past three years have seen an "unprecedented slowdown" of growth in mean debt levels.

Researchers suggest that fixed interest rates of 6.8 percent from 2009-11 may have played a role in that decline.

Authors of the AAMC analysis brief(www.aamc.org) said "the recent slowdown in education debt levels for medical students is not completely understood, though interest rates may play a role."

According to the analysis, in July 2006, Stafford loan interest rates for graduate medical education were fixed at 6.8 percent; previously, interest rates were variable and at times fell to less than 3 percent. Thus, the graduating class of 2009 "was the first medical school class to face at least three years of a fixed 6.8 percent interest rate," and that was the same time the growth of debt levels began to slow.

The authors noted that in the past 31 years, "medical student debt has increased at twice the rate of inflation, growing, on average, 7.8 percent per year." By contrast, "the last three years have seen an unprecedented slowdown in growth of mean debt levels, with values relatively stable in (2011) constant dollars in 2008-2011."

The researchers pointed out that the costs associated with medical school attendance traditionally have been based on tuition and fees for first-year students without taking into account the living expenses those students incurred or the fact that medical students in their final two years of study often spend more on living expenses. Therefore, for the purposes of their research, the authors included four full years of medical school in calculating costs.

Notably, the authors compared costs in private versus public medical schools and noted that in 2009-10, the 75 public medical schools that participated in the study reported a combined $1.25 billion in gifts and endowment funds available to support medical student grants and scholarships; the 51 participating private schools reported double that amount, or $2.5 billion.

The authors concluded that more research is needed to identify additional factors -- aside from cost and interest rates -- that play a role in the medical school debt that students incur.